​Calculation of EQ ROI

To calculate ROI (Return On Investment) for EQ, start by looking at the average effect size between top 10 percent and lower 75 percent of leaders. The ‘effect size’ metric is a standardized method for calculating the magnitude of the difference between the two groups. The difference between high and lower EQ leaders is 0.72, which is a statistically relevant difference.

Assuming an average leader salary of $75,000 per year, the difference between a high and average EQ leader equates to $21,600 per year. For an organization with 2,000 leaders this figure multiplies to $43.2 million in human capital asset value per year.​While this is a large number, it still does not account for the human capital asset value improvement experienced by leaders’ direct reports. A leaders’ value extends far beyond their individual contributions.

​Even a slight improvement in EQ would lead to large benefits for an organization. For example, a program yielding a one-percentage point improvement in leader EI would provide incremental human capital value of $2,160. Even if this program cost the organization $500 per person, the ROI would be 332%.​Clearly, investments in improving EQ have the potential for dramatically improving the productivity and value of leaders in organizations. It also echoes the results of a study conducted by Bloomberg BusinessWeek and Hay Group: companies ranked in the top 20 for leadership acumen significantly outperformed the S&P 500 in both the short and long terms.

Source: The Business Case for Emotional Intelligence, Institute for Health and Human Potential (IHHP)